Florida, Texas and California will see housing prices decline in 2025: analysis

Natural disasters are expected to lead to lower home prices in Florida, Texas and California next year, according to a new Redfin report.

In Redfin’s 2025 forecast report, analysts say the increased occurrence of natural disasters in these states could lead to a decline in real estate prices, particularly on the Florida coast and in hurricane-prone parts of Texas.

California, which has experienced wildfires across the country, could also see a more affordable market for home buyers, according to the report. Buyers could flock to cheaper locations in the Midwest and Northeast.

“Hurricane Helene and Hurricane Milton represented a turning point for many middle- and low-income homeowners in Florida,” Redfin said in its report.

“This fall, more homebuyers wanted to leave Florida than a year earlier, and fewer out-of-town buyers wanted to move into the state. We expect this trend to carry over to some Floridians moving away from the state’s coastal areas after becoming fed up with weathering destructive hurricanes and seeing housing costs rise despite falling prices as insurance costs, HOA -Fees and property taxes are skyrocketing.”

The report warns that insurance premiums and post-hurricane reconstruction costs will make Florida’s coast a place where only wealthy people can live.

Rising mortgage rates have already priced millions of Americans out of the home-buying market nationwide, and they are expected to remain at about 7 percent in the new year.

Title and escrow expert Alan Chang said while there could be shifts in demand in areas prone to natural disasters, he believed the impact on home prices overall would be “minimal.”

“Although wildfires, hurricanes and other insurance risks are causing some insurance carriers to exit certain affected regions, the impact on home values ​​is generally minimal because there are still many cash buyers looking for homes in many of these areas,” Chang said Newsweek.

“I don’t see this as a major area of ​​change for 2025 as inventory levels are still relatively low and therefore options are less than ideal.”

Across the country, Redfin economists predict that the average home sales price in the U.S. will rise steadily throughout 2025 and end the year 4 percent higher than in 2024.

And despite interest rates expected to remain stubbornly high, home sales are expected to rise between 2 and 9 percent in 2025.

Still, home prices in places like Florida, Texas and California could fall as the market normalizes, said Kevin Thompson, financial expert and founder and CEO of 9i Capital Group.

“In recent years, prices have risen rapidly and now we could see a correction,” Thompson said Newsweek. “In Texas, for example, real estate values ​​are already consolidating. This trend is concerning for sellers, but offers some relief for buyers – although mortgage rates, which hover between 6 and 7 percent, remain a hurdle.”

Thompson said Texas’ attempts to promote affordable housing and the abundance of land still available could also be contributing to property values ​​falling as new supply comes onto the market.

“Regions like the Southeast and large states like Texas with wide open spaces could see further price declines as suburban development expands,” Thompson said.

“Natural disasters such as wildfires and hurricanes have a significant impact on residential development, yet developers continue to build in these high-risk areas.”

As suburban developments in Texas increasingly expand into tornado-prone regions, wildfires pose a risk to even the most resilient properties in the West. Multiple hurricanes continued to devastate entire communities in 2024, and demand for these properties will reflect this story.

“Last year we experienced several hurricanes striking the southern United States, from Florida to the East Coast, in rapid succession,” Thompson said. “Looking ahead, 2025 could bring further changes. Insurance companies could raise their premiums even further or, as some have already done, abandon these high-risk regions altogether. This could create additional challenges for homeowners in disaster-prone areas.”